Suppose that in 2017, geologists discover large reserves of oil under the tundra in Alaska. These new reserves have a market value estimated at $50 billion at current oil prices. Oil companies spend $1 billion to hire workers and move and position equipment to begin exploratory pumping during that same year. In the process of loading some of the oil onto tankers at a port, one company accidentally spills some of the oil into a bay and by the end of the year pays $1billion to other companies to clean it up. The oil spill kills thousands of birds, seals, and other wildlife. What was the combined effect of these events on GDP for this year? Introduction: In the calculation of GDP for a particular year, the total value of goods and services purchased in the country are taken into account, which gives rise to an estimate about the growth of economic activities in a country.

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Chapter 8, Problem 17P

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Suppose that in 2017, geologists discover large reserves of oil under the tundra in Alaska. These new reserves have a market value estimated at $50 billion at current oil prices. Oil companies spend $1 billion to hire workers and move and position equipment to begin exploratory pumping during that same year. In the process of loading some of the oil onto tankers at a port, one company accidentally spills some of the oil into a bay and by the end of the year pays $1billion to other companies to clean it up. The oil spill kills thousands of birds, seals, and other wildlife. What was the combined effect of these events on GDP for this year?

Introduction:

In the calculation of GDP for a particular year, the total value of goods and services purchased in the country are taken into account, which gives rise to an estimate about the growth of economic activities in a country.

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